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Initial Coin Offering in Germany

Updated on Saturday 30th July 2022

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Initial Coin Offerings, which are also known as ICOs, are an easy way through which a new cryptocurrency venture can raise funds in order to appear on the market. In Germany ICO is a very popular form to finance a start-up. ICO’s from Germany benefit from a high level of trust on the international market, thanks to the innovative and responsible initiatives which originated in this country. One of our company formation experts in Germany can give you more details concerning the opportunities and legal framework related to the initial coin offering in Germany.
 

Are there any laws related to ICOs in Germany?

 
There is no special law to regulate the creation of initial coin offerings in Germany, however, each case is reviewed individually by the Financial Supervisory Authority (BaFin) in order to be issued a license.
 
When created as domestic entity, the company launching the ICO can fall under one of the following regulations:
 
  • - the German Banking Act;
  • - the Securities Trading Law;
  • - the German Capital Investment Law;
  • - the Insurance Supervision Act;
  • - the Payment Services Supervision Act;
  • - the German Securities Prospectus Law;
  • - the Capital Investment Code.
 
The law applicable also depends on the type of token issued. Digital coins can take various forms depending on the way they are used. They can be employed as means of payments or as utility tokens.
 
A particularity associated with this type of business in Germany is that companies offering ICOs do not fall under the regulations of the Stock Corporation Act, as tokens are outside the scope of this law. On the other hand, the legal entity used to create the company can be registered under its requirements.
 
Should you want to create an ICO and need support, feel free to address our company registration advisors in Germany for details on the applicable laws.
 

How to set up an ICO in Germany

 
ICOs are employed by cryptocurrency firms which are set up in Germany, for fundraising purposes. It is important the firm issues a plan and statement regarding the purpose and ideas on which the company will function. Afterwards, an ICO campaign can start in which investors buy virtual tokens in the firm. 
 
In order to be able to perform all the processes related to ICO and virtual currency, you will need first to register your firm in Germany. Our consultants in company registration in Germany can help you elaborate an application file with all the documents required by the authorities. 
 

What are the types of tokens accepted under the German legislation?

 
One of the particularities of creating an initial coin offering in Germany is to have a digital token that can be used for various purposes. Depending on the respective virtual asset, it will also be established whether the company needs a license or not.
 
Here are the main types of tokens acknowledged in Germany:
 
  • - utility tokens that are used to pay for services or products that the fundraiser creates;
  • - payment tokens that can be used as a form of payment or traded and exchanged for traditional and digital currencies on specialized trading platforms;
  • - equity or investment tokens that grant membership rights or shares in the issuer's future earnings.
 
In most cases, equity tokens can be regarded as financial instruments. They must meet specific requirements in order to be traded on exchange platforms that operate like the Stock Exchange.
 
If you want to open a company in Germany and need more information on how to use it to launch an ICO, you can rely on our local experts.
 

Classification of tokens as financial instruments in Germany

 
Even if not specifically regulated, digital money has become a trend all over the world. One of their main uses is that of financial instruments, as they can be employed for trading purposes. For this purpose, BaFin issued an advisory letter through which investors can meet the requirements to have their coins recognized. The letter follows Switzerland’s guide on ICOs which is one of the most advanced in Europe.
 
Here are the main aspects to consider when it comes to the classification of ICOs as financial instruments in Germany:
 
  • - the digital coins are transferable;
  • - they are also negotiable while having the possibility to be traded on financial or capital market (for this purpose, cryptocurrency exchanges can be used);
  • - they carry rights – these rights can be similar to those of shares;
  • - they can not be used as payment instruments.
 
Feel free to address our officers if you want to create a German ICO.
 

Why set up an initial coin offering in Germany?

 
One of the reasons for which so many investors find Germany as the right place to launch ICOs is that the legislation gives a lot of free space to cryptocurrency initiatives. Apart from the Asset Investment Act, which could imply several requirements regarding the public offering of tokens, the initial coin offerings in Germany do not yet fall under a specific German act. 
 
Germany is moreover a very stable economy and this represents another encouragement factor for the entrepreneurs who intend to use the initial coin offering in Germany. This country is also very well known in the business environment for the efficient implementation of the latest innovations in the field of cryptocurrency. 
 

Increased interest in investing in crypto among Germans

 
According to several reports and news, a large part of the German population is interested in investing in digital money, as follows:
 
  • - around 44% of the people interviewed felt motivated to invest in crypto as they consider digital coins as the future of finance;
  • - 35% of the respondents consider crypto as a way of making passive income;
  • - 30% of them think of crypto as a reliable investment for the future and as a way to financial independence.
 
Feel free to contact our consultants in company formation in Germany in order to simplify the registration of your business and speed up your ICO in this country.
 

Meet us in Germany


Marco Rössel is a Partner at Liesegang & Partner and an experienced Attorney at Law. He is specialized in commercial and corporate law and can help you open your company in Germany as fast as possible.

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Call us now at +49 69 71 67 2 67 0 to set up an appointment with our company formation experts in Germany. Alternatively you can incorporate your company without traveling to Germany.

As our client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Germany.

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